How to play hardball

Do you really want to wipe out the competition? STEFAN STERN spells out the Six Ps that drive the steeliest business winners.

by
Last Updated: 09 Oct 2013

Do you love the smell of napalm in the morning? According to some business gurus, you had better acquire the taste. Blood-curdling competition, emerging all the time both at home and from distant corners of the globe, threatens to steal your living away. In this context, the only sensible course of action is to toughen up, and get lean and mean.

When George Stalk and Rob Lachenauer published their article 'Hardball' in the April 2004 edition of the Harvard Business Review (see below), these Boston Consulting Group VPs gave expression to a growing orthodoxy that until then had dared not speak its name. But Stalk and Lachenauer's approach is unflinching. Why are you in business, they ask... is it to get by, to have fun, to be nice – or is it to win? Are you following a considered strategy or just muddling through? How much longer will you tolerate sub-standard performance from your employees? Are you striving for excellence and market dominance – or are you just keeping your head down and waiting for your pension to kick in? Stalk and Lachenauer suggest that the future belongs to the uncompromising hardball player.

Of course, it could be argued – as Winston Fletcher did in MT recently – that the JKA (Just Kick Arse) style of management comes easier to Americans than to Brits and other Europeans. There is a tradition in the US, for example, of running advertising messages that explicitly rubbish the competition. GM's Pontiac tried to outmuscle Toyota in the early 1990s with some aggressive and menacing ad copy – to little avail. More recently, Microsoft CEO Steve Ballmer reportedly threatened to 'kill Google'.

This approach has finally reached the UK with Kimberly-Clark's recent campaign for Huggies Super-Flex nappies – which are, the company assures us, 'five times stretchier than Pampers Baby-Dry'. The shit has hit the fan. Lastly, a warning: if you pick a fight, make sure it's one you can win. In the New York Senate race in 2000, Republican candidate Rick Lazio ran a memorable campaign ad against his Democratic opponent Hillary Rodham Clinton. Sombre music played, a grainy and unflattering photo of Hillary appeared on the screen, and a deep, chilling voice declared: 'Hillary Clinton – you just can't trust her'.

Hillary Rodham Clinton went on to win the race pretty handily, and is set for a presidential run in 2008. And Rick Lazio? No, I haven't heard much more of him either. So if you're going to go nuclear on the opposition, make sure you understand what this fight entails and start from a position of reasonable strength. On the following pages are the six key aspects of a successful demolition strategy...

PUNCH-UP (you're in one)

Be clear: competition is not nice. It is hard, relentless and tense. You need to have the appetite for a long-lasting battle. Business has thrown up some classic confrontations over the years: Coke vs Pepsi, Hertz vs Avis, Nike vs Adidas, Boeing vs Airbus, Stork vs butter. Japanese motorbike and car-maker Honda famously adopted a company slogan of Yamaha wo tsubusu, usually translated as 'We will destroy Yamaha'. Whatever the market, it has sometimes proved helpful for businesses to target a specific opponent and make a goal of wiping them out.

Boxers preparing for a fight work on their fitness and their strengths and weaknesses, but also, crucially, on the strengths and weaknesses of their opponents. Winning on one occasion may mean doing enough to be better than the current challenger, but winning over the longer term means beating all comers. So part of any long-term winning strategy for business must involve not only being fit here and now, but also constantly honing and improving technique.

How lean is the supply chain? Does your performance management system reward the sort of behaviour you need from staff? Do you try hard enough to understand what customers want? And are you making sure you offer better value than everybody else in this market?

These are apparently simple questions, the answers to which may take years to be put into effect. Never mind. Nothing happens suddenly in business. Products, markets and cultures can take a generation or more to develop.

But if you are squeamish and don't like the sight of blood, it would be better to stay out of the ring altogether. Find a non-competitive sector to play in – or join a protected monopoly. Once the fight starts, it is on for good. And there is no referee to intervene to prevent further punishment. The market will do that for you, sending you to the canvas for a full count of 10.

POACH (but wisely)

How many good ideas do you have a year, really? Who in your management team is a top performer and who is merely a makeweight? You probably don't have time to develop all your own talent and you certainly will not have a monopoly on all the good ideas. So – guess what – you are going to have to steal some.

Yes, I know. Poaching sets a bad example. When you acquire a new colleague through underhand means, you may provoke a revenge strike. And if monetary rewards are the only way you can lure someone away from their current employer, the new relationship may not prove to be a long or happy one. So get it right. Poach wisely. Don't just use cash – which is a poor motivator in any case. Offer an all-round package that appeals to the target's vanity and self-esteem. Invent a magnificent job title and give them a very short reporting line to the top. Build flexibility and autonomy into their new job. Accede to some of their fanciful demands.

As with people, so with ideas. Have you ever seen a really nifty new product or service, and wished you had come up with it? So copy it, improve on it, make it yours. As Tom Lehrer sang: 'Plagiarise, plagiarise. Let no-one else's work evade your eyes.'

Gurus talk a good deal about 'first-mover advantage', but it is an advantage only if that first move can't be copied or bettered. Fast followers can clean up if they are not embarrassed to be stealing somebody else's brilliant original idea. Casio didn't worry what Sir Clive Sinclair or Texas Instruments thought about its calculators – it just went ahead and made better ones.

Your competitors will, inevitably, have some bright people with bright ideas, giving them an advantage from time to time. You can't just sit back and let them walk all over you. If you can't beat them, poach from them.

PROTECT (your position)

Napoleon got it wrong. So did Hitler. You can't fight on every front at the same time. Some battles may be too big to take on at the present. Part of staying strong and achieving long-term superiority is knowing when not to over-extend yourself.

Sometimes you need to shore up your gains and protect what you already have. For instance, what sort of contracts are your key staff and preferred suppliers working to? Are they tied in and immune to the poaching attempts of rivals (see above)? Are your patents and IP protection up to date? If you have a market-leading product, how are you ensuring its future success? Apple's ground-breaking iPod has changed the way the music business works and given Steve Jobs five years of market dominance, to boot. But that's been achieved only by vigorously maintaining a technical lead and by locking customers into other Apple products, such as the iTunes website. And still the competition is catching up.

Chris Zook, a partner at management consultants Bain & Company, showed in his book Profit from the Core (Harvard Business School Press, 2001) how many firms went astray by over-committing themselves in too many directions. Ashridge's Andrew Campbell built on these ideas in his book The Growth Gamble, published in May by ASMC. Both authors make a similar point: sometimes, realism is the better part of business valour.

'Managers need to recognise that many companies, at many points in their history, will be able to grow slowly, if at all,' Campbell writes. 'Managing low growth wisely may be a skill that most managers still have to learn... Entering new businesses is highly risky and should be avoided unless the circumstances are clearly favourable.'

PARANOIA (cultivate it)

In George Orwell's dystopian creation 1984, the state of Oceania is threatened by a mysterious 'enemy of the people', Emmanuel Goldstein. Goldstein had once been a true believer and fellow traveller, but is now the state's number- one hate figure. He is an ever-present threat who has to be defeated.

Businesses need their Goldstein figures too, someone (or something) to constantly measure themselves against. And that measurement needs to take place in a spirit of carefully controlled paranoia.

Be your own toughest critic. What sort of customer experience are you offering? Where are you weak? Where are you vulnerable? What are your chief competitors up to now, and – more importantly – what are they planning for the future?

Paranoia may be a slightly excessive term to describe Toyota's attitude to waste (muda in Japanese) – but only just. For Toyota, waste and defects are the enemies. Quality must be worked on relentlessly. The production process must be as lean as possible, and suppliers must comply with the demands of Toyota's approach or be dropped. In a sense, Toyota has made its own human frailty a target of sustained paranoia. And its march to domination of the global auto industry continues almost unchecked.

Emmanuel Goldstein, Orwell seems to suggest, may not exist at all. That doesn't matter. He serves his purpose: keeping citizens alert, tense, on their toes, ready to perform. You may need to be similarly creative when it comes to persuading your people not to slacken off at any moment. Andy Grove, former chief executive of computer-chip giant Intel, put it succinctly in the title of his memoirs: Only the Paranoid Survive.

PAY-OFF FOR A TOUGH PLAYER

The price of oil rises and rises, and what does Ryanair's chief executive say about fuel surcharges for passengers? 'Not now and not ever.' A disabled passenger needs to get to his flight at Stansted, and what does Ryanair do? Charges him for the assistance given (the firm disputes this version of events). Ryanair's Michael O'Leary is the classic hardball player. He leads a permanent war on costs, and he told one interviewer: 'I don't give a shite if nobody likes me.' If the Greens think his planes pollute the planet too much, 'sell your car and walk' is his advice. Interestingly, he has likened his approach to that of another hardball player. 'Our strategy is like Wal-Mart,' he says. 'We pile it high and sell it cheap.'

He must be doing something right. At the beginning of August, the firm announced impressive first-quarter figures, with profits leaping 31%. Net income for the three months to June rose to a record €69.6 million (£47.3 million).

The airline says it expects to carry 35 million travellers in the year 2005-06, a 27% rise that O'Leary says will take Ryanair past British Airways' passenger total for the first time.

Nor does the company ever pass up a chance to denigrate its low-cost opponent easyJet. Month after month, it trumpets its own (always) superior punctuality figures. When MT asked O'Reilly about easyJet and competing routes, he snorted: 'We're beating the crap out of them on each one.'

Now that really is a hardball answer.

FIGHTING TALK

In their article in Harvard Business Review, George Stalk and Rob Lachenauer offer five key elements to their hardball manifesto and suggest five basic strategies. Their analysis differs slightly from the Six Ps approach, but the emphasis is similar. The key elements are:

1 Focus relentlessly on competitive advantage Aim to widen the performance gap. Do not accept today's competitive advantage – go for tomorrow's.

2 Strive for 'extreme' competitive advantage This is the ultimate goal. Do not relax until you are out of sight.

3 Avoid attacking directly Head-on confrontation may be risky. Try the indirect route.

4 Exploit people's will to win Foster a sense of urgency to avoid complacency.

5 Know the caution zone Play hard, but do not go to jail.

Their five hardball strategies are:

1 Devastate rivals' profit sanctuaries Be aggressive (but not predatory) on pricing.

2 Plagiarise with pride Steal (and improve on) any good idea you can without infringing a patent.

3 Deceive the competition Sell a dummy, throw a feint: knock competitors off balance.

4 Unleash massive and overwhelming force Your attack must be like a hammer blow: focused, direct and swift.

5 Raise competitors' costs Use pricing to manoeuvre your competitors into a situation where their costs increase.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today